Big banks beware. Your "insane" profits - estimated at $29 billion this year - are in the sights of some of Australia's most ambitious technology entrepreneurs.

The co-founders of SEEK and Atlassian - two of Australia's most successful technology companies - believe financial services is the industry most vulnerable to disruption by new technologies.

"We have over $27 billion to $28 billion of banking profits per annum," Paul Bassat told The Australian Financial Review and Macquarie Future Forum in Sydney. "That's quite extraordinary ... that's over $1000 per man, woman and child."

Mr Bassat, the co-founder of Seek and chief executive of venture firm Square Peg Capital, believes traditional banks will be challenged by start-ups that work out new ways to solve old problems, including payments and peer-to-peer lending.

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Banks know the threat is coming. Westpac recently invested $5 million in peer-to-peer lender SocietyOne. Others have introduced new ways for small and medium businesses to take payments over smartphones and tablets.

"The profitability of the banking industry in this country is insanity," said Atlassian co-founder Mike Cannon-Brookes, who is a director of banking competitor Tyro Payments, which has a banking license to process credit card transactions.

"It doesn't appear anywhere else in the world and I think Tyro, like a bunch of others, are trying to change that and doing a phenomenal job."

According to PwC research, Australia's big four banks generated a combined $27 billion in profits in 2013, and $14.7 billion for the first half of 2014.

The warning comes as banks themselves are increasingly looking at Facebook, Apple, Google and Amazon.com as potential rivals.

Facebook has reportedly applied for an e-money license in Ireland, which would enable it to issue its own currency and compete in the lucrative global remittances industry.

In Australia, eBay's payments subsidiary PayPal pushed the financial systems inquiry led by David Murray to overhaul legislation that it says is holding back financial innovation in Australia.

Smaller companies are looking to get some of the market. Australian medical school drop-out Josh Reich helped found US online bank Simple, which promised customers a more transparent view of their fortunes with updated technology. The company was acquired by Spanish global bank BBVA for $US117 million this year.

Although Australia's big banks are protected by one of the most highly regulated financial systems in the world, the fear remains that technology companies can use their experience creating products that customers want to use in order to offer services that rival the banks.

George Frazis, chief executive of Westpac subsidiary St.George, told a business lunch last month that disruption was likely for the banks.

"Twelve months ago I might have said that being a quick follower may be enough; now I strongly believe you have to strive to be a leader," he said.

"Although we are at the beginning, things are moving quickly. It's easy to forget that tablets did not exist before 2009."

Mr Bassat described payments as "the holy grail" of innovation and a significant area of likely competition with the banks.

Companies such as PayPal, MYOB and Square, the US company founded by Twitter director Jack Dorsey, have become likely rivals. Each offers ways for small businesses such as tradespeople and cafes to take credit cards and payments using smartphones and tablets.

The low-margin, high-volume market is seen as a significant point of rivalry with the big banks. Commonwealth Bank and Westpac are introducing mobile apps and accessories to fight the threat.

Mr Bassat pointed to peer-to-peer lending, online platforms that allow investors to lend directly to consumers, as another potential space for competition and innovation.

SocietyOne, a two-year-old company that has facilitated 200 loans worth $4 million, has recently attracted investor attention from businessmen James Packer and Lachlan Murdoch.

"There's a bunch of people that just can't get the money they need for day-to-day activities ... but it's also an opportunity for yield-hungry investors to get better returns without intermediaries taking a pretty significant clip on the way through," he said.

He also pointed to technology companies that relied on decade-old business models as facing the threat of extinction. He singled out MYOB, the accounting software maker, as an example of a company being rivalled by Xero, a New Zealand accounting software maker that has gone online-only to serve customers more quickly and at a cheaper price.

"To be frank, companies like MYOB,, I think they're in a world of pain," he said.